Here’s how it would work in authoritarian countries: They pass a law that Apple needs to use their homemade database, and that Apple needs to submit matches that never get uploaded to the cloud. They start adding politically sensitive photos such as Tank Man and modern memes criticizing their government to their database.
And since Apple doesn’t know what’s in the database, they have no way to check for potential civil rights violations. Apple dutifully reports all images, and people get arrested for saving the wrong political image to their phone/tablet/computer.
While the scanning itself wasn’t the worst of violations, it doesn’t take much imagination to see how it could be expanded and twisted by a government with less respect for its citizens. I could imagine even mostly-free countries requiring Apple to expand it. For the children, for terrorism, for Neo-Nazis, for foreign government influence… there’s always an excuse to separate people from their privacy. Tools like this would get used in the worst ways.